As the owner of the Chateau brand and considering that there could either be a yes or no response, my choice would be to not create a new “affordable luxury” brand directed to the young. The following key reasons why Chateau should not go for segment:- 1. Brand Dilution:-
The existing brand represents exclusivity and appeals niche target customer segment. Moreover the wine brand is perceived good and maintains a high quality in customer’s minds. Any deviation can hit the brands perceived value in the eyes of the customers and lead to brand dilution. Dilution can potentially hit its existing wine being sold and reduction of revenue from that brand. This will potentially reduce the overall brand equity.
2. Unnecessary Diversification:-
It is a super luxury segment which is difficult to imitate and stands less risks and hence it is not necessary to diversify to a different customer group
3. Reduced Aspiration:-
If the young get access to the wine now the aspiration of drinking this in adulthood would wane away which could be exceptionally detrimental to the future when the young become the actual target segment.
4. Deviation from Competition
Since its competitors are already getting into affordable segments, not changing its strategy could actually be beneficial and may attract competitor’s high value customer’s switch to its brand which could be a good gain than imitating their competitors.
5. Costs & Competency
Affordable wine can only be successful in high volumes and Chateau doesn’t have an experience in that segment. Moreover the costs involved as follows were huge for taking a risk. a. It will need to put in place a distinct marketing and distribution strategy b. The reposition is looking at the lowest segment completely opposite to the current market segment which needs a completely new strategy and associate expenses
6. Risk of losing...